UK mortgage loans continue to rise

They reach the highest level since March 2008

(LONDON) UK mortgage approvals climbed in October to the highest level in one and a half years, adding to signs the economy is shaking off the recession.

Lenders granted 57,345 loans to buy homes, compared with 56,205 in September, the Bank of England said yesterday in London. The median of 22 forecasts in a Bloomberg News survey was 57,000. Net consumer lending fell by £579 million (S$1,548 million), the most since records began in 1993.

UK house prices rose for a fourth consecutive month in November as a shortage of homes sustained the property market, Hometrack Ltd said yesterday. Bank of England Governor Mervyn King said last week that the pace of economic growth may be 'pretty buoyant' in the short term even if the recovery isn't 'particularly strong'.

'We will see mortgage approvals continue to rise but not to anywhere near the sort of levels we saw pre-crisis,' George Buckley, chief UK economist at Deutsche Bank AG in London, said before the report. 'The economy's recovery will be slow and steady to begin with but I'm not sure that's sustainable. We will see some bumps along the way.' The pound was little changed at US$1.6515 at 9:33 am in London. The yield on the benchmark 10-year government bond was also little changed at 3.52 perc ent.

Net mortgage lending rose by £922 million in October, compared with £898 million in the previous month, the central bank said. House prices increased 0.2 per cent in November, the same pace as in October, Hometrack said yesterday.

Rising unemployment may still curb house-price gains. Consumer confidence fell 4 points to minus 17 in November, GfK NOP said in a report yesterday . A gauge of whether people think this is a good time to make major purchases dropped seven points to minus 19.

Today's data suggested consumers are more reluctant to add to their debts, which now total an outstanding £1,458 million, down about £400 millionfrom September.

Net consumer credit fell as overdrafts and loans dropped 713 pounds, the most since records began in 1993. That offset a £134 million increase in credit-card lending, the Bank of England said. -- Bloomberg

Source: Business Times, 1 Dec 2009